Friday, 18 August 2023

Market Summary

Market Summary 18 August 2023

Bitcoin Price: US$ 26,623.41 (-7.33%)
Ethereum Price: US$ 1,681.49 (-6.99%)  


In a tumultuous turn of events, the cryptocurrency sector witnessed a staggering $1 billion in losses from liquidations within a mere 24-hour span, as digital asset markets grappled with one of the most severe sell-offs of the year. Bitcoin, the eminent pioneer in the cryptocurrency domain, endured a precipitous descent of 7% to approximately $26,900, plunging even further to around $25,000 earlier, marking its lowest point since June. A resounding blow was dealt to long positions, resulting in a sweeping obliteration of $821 million, highlighting the plight of traders who had banked on ascending prices. Bitcoin acutely bore the brunt, accounting for $472 million of the harrowing losses, while Ether followed suit with $302 million. This dire occurrence stands as the most extensive Bitcoin liquidation for a single day since June 2022, a period reminiscent of the cryptocurrency’s abrupt plummet to $17,000. Amidst an atmosphere of economic anxiety, including faltering foreign currencies, Chinese financial uncertainties, and surging bond yields, the crypto sector’s major players, like BTC and ETH, encountered near-double-digit declines, reaching levels not witnessed since the early summer. Meanwhile, on a parallel front, prospects for the cryptocurrency landscape seemed to shift, as reports surfaced indicating the potential approval of Ether futures ETFs by U.S. securities regulators. Multiple firms had submitted applications to offer exchange-traded funds tied to derivatives contracts linked to ether, awaiting the crucial endorsement of the U.S. Securities and Exchange Commission. This development led to an immediate 11% surge in the price of Ether, surmounting $1,700, and highlighting the market’s sensitivity to regulatory cues. As multiple applications await consideration, the regulatory landscape remains uncertain, though indications suggest that approval of select filings could materialise as early as October. The SEC’s evolving stance underscores the malleability of its perspective on diverse financial products, a testament to the changing dynamics of the sector. In the midst of this regulatory discourse, Ethereum’s value experienced a swift 11% rebound to $1,717, a vivid illustration of the market’s responsiveness to news-driven fluctuations.

Mastercard has unveiled a collaborative initiative with seven prominent blockchain and payment technology entities to foster an enhanced comprehension of the potentials and constraints surrounding central bank digital currencies (CBDCs). While the specific strategy remains undisclosed, the project aligns with current CBDC discourse, touching upon security, privacy, interoperability, and driving innovation. Notably, Ripple, ConsenSys, and Fluency, among others, will contribute to this consortium, each having made significant strides in CBDC advancement. In a parallel narrative, Tether, the issuer of a stablecoin, has announced the discontinuation of its Bitcoin Omni Layer version due to waning user interest. Despite its historical significance, Tether’s usage declined as it faced challenges against newer transport layers. The company contemplates reissuing on the Omni Layer if usage revives, while simultaneously developing an alternative Bitcoin smart contract system called “RGB.” Additionally, aerospace giant SpaceX has reportedly devalued its Bitcoin holdings by $373 million and might have liquidated them. This decision follows the trend set by Tesla, co-founded by SpaceX CEO Elon Musk, which had also acquired and sold substantial amounts of Bitcoin in the past. These developments underscore the dynamic and evolving nature of the cryptocurrency landscape within both financial and technological domains.

Beginning on September 1, crypto asset businesses in the UK will be required to adhere to the Financial Action Task Force’s (FATF) Travel Rule, which mandates compliance with Anti-Money Laundering and Counter-Terrorist Financing regulations. This move, in line with FATF standards set in 2019, necessitates virtual asset service providers (VASPs) to share customer information during transfers to identify suspicious transactions. The UK, aligning with this global initiative, passed legislation for Travel Rule enforcement in July 2022. Crypto businesses must fully implement the Travel Rule by September 1 when sending or receiving crypto assets within the UK or jurisdictions that have embraced the rule, even when using third-party vendors. Additionally, if transacting with VASPs in non-compliant jurisdictions, originating UK businesses must ensure recipients can receive required information. On a different note, defunct crypto lending firm BlockFi has opened withdrawals for eligible US users following a US bankruptcy court order, allowing access to funds after months of inaccessibility. The move aligns with the company’s efforts to return user funds after filing for Chapter 11 bankruptcy protection. Lastly, the concept of tokenization is gaining momentum as the “token era” gains prominence. Brickken, a tokenisation solution, enables companies to create digital tokens backed by real-world assets efficiently and instantly, catering to the evolving financial landscape.




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